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The Prevention and Control of Economic Crime in China

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The Prevention and Control of Economic Crime in China The Prevention and Control of Economic Crime in China: A Critical Analysis of the Law and its Administration Enze Liu Submitted in Fulfilment of the Requirements for the Degree of Doctor of Philosophy Institute of Advanced Legal Studies School of Advanced Study, University of London September 2017 Declaration I hereby declare that this thesis represents my own work. Where information has been used they have been duly acknowledged. Signature: …………………………. Date: ………………………………. 2 Abstract Economic crime and corruption has been an issue throughout Chinese history. While there may be scope for discussion as to the significance of public confidence in the integrity of a government, in practical terms the government of China has had to focus attention on maintaining confidence in its integrity as an issue for stability. Since the establishment of the Chinese Communist Party (CCP) and its assumption of power and in particular after the ‘Opening’ of the Chinese economy, abusive conduct on the part of those in positions of privilege, primarily in governmental organisations, has arguably reached an unprecedented level. In turn, this is impeding development as far as it undermines public confidence, accelerates jealousy and forges an even wider gap between rich and poor, thereby threatening the stability and security of civil societies. More importantly, these abuses undermine the reputation of the CCP and the government. China naturally consider this as of key significance in attracting foreign investment and assuming its leading role in the world economy. While there have been many attempts to curb economic crime, the traditional capabilities of the law and particularly the criminal justice system have in general terms been found to be inadequate. This thesis examines the existing law relating to fraud and corruption, as a mechanism for reducing the incidence and impact of such abuses and offers appropriate recommendations for rendering it more efficient and efficacious. The author discusses the legal history of economic crime control, followed by the various initiatives that have been undertaken at different levels of government to curb economic crime and corruption since the foundation of the People’s Republic of China. This thesis also assesses the existing legal and institutional regime for the protection of victims of economic crime. China’s stand against corruption is then placed in the context of various international initiatives, in particular those involving the United Nations. 3 The primary objective of this thesis is to assess the law and its administration in China in the fight against economic crime and corruption and to facilitate a better understanding and control of the issues relating to the prevention of this phenomenon, in the promotion of China’s economic and political stability. 4 Acknowledgement It gives me tremendous pleasure to acknowledge all those who have assisted me in a variety of ways, from a variety of continents, with this thesis. Firstly, I am especially indebted to my supervisor, Professor Barry Rider, for the inspiration, encouragement and patient guidance he has given me throughout the preparation of this thesis and for his support, both academically and personally, in every possible way during my time in the UK. I could not have imagined having a better supervisor and mentor for my PhD study. I would also like to express my sincere gratitude to May Xing, the Programme Leader of my LL.M degree, for encouraging me to embark upon my PhD journey; Dr Ye Feng, not only for the service he has contributed over the years as a Senior Prosecutor at the Supreme People’s Procuratorate in the fight against economic crime in China, but also for selflessly sharing his work and experience; and Tao Xiuming, Senior Partner and co-founder of the Junzejun Law Firm, for sharing his practical views and comments on the current trend of economic crime. I also offer thanks to a number of governmental officials, judges and prosecutors, who prefer to remain anonymous, for their insightful comments. Indeed, if it was without any of you, this thesis would not have been possible. My special thanks go to Shandong University, one of the top universities in China, for the incredible assistance offered to me throughout my research trip in China. In particular, I should mention the dean of its law school, Professor Qi Yanping, and his fellow academics, Professor Chi Deqiang, Dr Hua Wei, and Dr Feng Junwei. I would also like to thank the librarians at this wonderful National Library in the Institute of Advanced Legal Studies, and the staff at its registry, for their very timely 5 support. I thank my PhD colleagues working day and night in PhD room, and my so many friends within and outside the university; special mention goes to Yao Min, Sharon Judge, Robert Murfin, Denis Osborne, Wang Zhou, Zhang Hanbin, Li Meiying, Shen Jianan, Salim Al-Ali and Christoph Beischl, for being exceptionally kind and supportive throughout my PhD life in London. Finally, but by no means least, thanks go to my beloved parents and my girlfriend Yanan for totally unbelievable support over so many years. They are the most important people in my world and I dedicate this thesis to them. 6 Table of Contents Abstract ......................................................................................................................... 3 Acknowledgement ........................................................................................................ 5 Table of Contents ......................................................................................................... 7 Abbreviations ............................................................................................................. 12 Introduction ................................................................................................................ 15 Chapter 1: A Criminological Discussion and Analysis of Economic Crime, with Particular Reference to Corruption ......................................................................... 21 The immoral phenomenon ....................................................................................................... 22 The definition of economic crime ............................................................................................ 24 Economically motivated crime ................................................................................................ 30 A criminological analysis ......................................................................................................... 37 Economic and social implications of economic crime ............................................................ 46 The situation in China .............................................................................................................. 52 The distinction between facilitative and non-facilitative crime ............................................... 54 Conclusion ............................................................................................................................... 57 Chapter 2: A Historical Review of the Control of Corruption on Economic Crime in China ....................................................................................................................... 59 Corruption control in ancient China ........................................................................................ 60 Chinese Slavery Societies (2070-476 B.C.) ................................................................ 60 Chinese Feudal Society (221 B.C.-1911 A.D.) ........................................................... 63 Primary methods used ................................................................................................. 68 The provisions before 1949 ..................................................................................................... 70 After the modern foundation of the People’s Republic of China ............................................. 74 Three and Five Anti’s Campaign ................................................................................ 75 The period of disruption ............................................................................................. 79 New laws and new approaches ................................................................................................ 80 7 Prosecution system ..................................................................................................... 82 Central commission for discipline and inspection ...................................................... 83 Conclusion ............................................................................................................................... 83 Chapter 3: Economic Crime and Corruption in the Context of the Opening of China ........................................................................................................................... 85 Introduction – the opening of the Chinese economy ............................................................... 85 The relevance of crimes in terms of stability ........................................................................... 88 Establishing the rule of law – the background ............................................................ 90 Worsening economic crime ......................................................................................... 99 How do they define economic crime? ...................................................................... 103 Two-tiered price system ...........................................................................................
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